Apple now the largest buyer of semiconductors according to Gartner

No one would be shocked to learn that Apple is a major purchaser of semiconductors. Heck, hearing that the company is number one on that list might not even raise too many eyebrows. But, what if you we told you last year the Cupertino crew wasn't the biggest purchaser, or even the second. In 2010 the House that Jobs Built was a distant third behind Samsung and HP but, following a significant surge thanks to the iPad 2 and the updated MacBook Air, its bumped those companies back a slot. In 2011 Apple increased its semiconductor spending by 34.6 percent, from $12.8 billion to $17.3 billion. Samsung stayed in the number two spot with a 9.2 percent jump in spending to $16.68 billion. Meanwhile HP dropped from first, spending only $16.62 billion and settling for the bronze. Check out the source link for the complete rankings from Gartner.

Leading electronic equipment manufacturers remained the center of the semiconductor world in 2011, accounting for $105.6 billion of semiconductors on a design total available market (TAM) basis - 35 percent of semiconductor vendors' worldwide chip revenue, according to Gartner, Inc. This represented a year-over-year increase of $1.8 billion, or 1.8 percent from 2010.

Design TAM represents the total silicon content in all products designed by a certain electronic equipment manufacturer or in a certain region, while purchasing TAM represents the total silicon content purchased directly by a certain electronic equipment manufacturer or in a certain region. Design TAM is a useful index for semiconductor vendors when they are considering how to allocate their sales or field application engineer resources by customer or region. Purchasing TAM is a useful index for semiconductor vendors when they are considering how to establish an efficient distribution network by customer or region.

"The major growth drivers in 2011 were smartphones, media tablets and solid-state drives (SSDs)," said Masatsune Yamaji, principal research analyst at Gartner. "Those companies that gained share in the smartphone market, such as Apple, Samsung Electronics and HTC, increased their semiconductor demand, while those who lost market share in this segment, such as Nokia and LG Electronics, decreased their semiconductor demand. Media tablets were also a growth driver for the semiconductor market throughout 2011."

"Given the rapidly changing competitive structure of the IT and electronics industry, no semiconductor device vendor can afford just to monitor the requirements of the current market leaders," Mr. Yamaji said. "Vendors need to be constantly looking for new market entrants who will, in turn, be tomorrow's market leaders."

Within the top 10 rankings, three companies were from the Americas, three from Asia/Pacific, three from Japan and one from Europe, the Middle East and Africa (EMEA). Apple led the market in 2011 (see Table 1), achieving significant growth, as it has done for the past five years. As a result, Apple became the biggest customer of semiconductor chip vendors in 2011, climbing two places in the ranking, from third in 2010.

Apple gained a much greater share of the smartphone market, and its media tablet business was also highly successful in 2011. While DRAM prices fell drastically in 2011, and many PC vendors decreased their total semiconductor demand accordingly, the success of the MacBook Air enabled Apple to increase semiconductor chip demand even in its PC business.

Mr. Yamaji said that as more brand-name companies are increasing their production outsourcing to original design manufacturers (ODMs) and electronics manufacturing services (EMS) providers, semiconductor procurement by ODMs and EMS providers has increased year over year. Currently, three of the top 10 purchasing TAM companies are so-called contract manufacturers.

"Semiconductor chip vendors must pay attention not just to the design TAM and purchasing TAM by company, but also by region," said Mr. Yamaji. "This is the key to avoiding inappropriate sales resource allocation. They must keep an eye on design-win opportunities in the U.S., while also establishing a strong distribution network in China."

*Note to Editors on Nokia and Sony In the ranking table, two joint ventures are included as stand-alone firms, as they are independent buying centers: Sony Ericsson and Nokia Siemens Networks. They are still considered independent companies in this report. This means Nokia does not include the TAM of Nokia Siemens Networks, and Sony does not include the TAM of Sony Ericsson.

Additional information is available in the report "Market Insight: Apple Led OEM, ODM and EMS Semiconductor Demand in 2011." The report is available on the Gartner website at http://www.gartner.com/resId=1517414.